Financial Management Principles: What are financial ratios? Which ratios might you use in your analysis?
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You have been given the financial statements and asked to analyze the financial performance of your division. Other managers have suggested you use financial ratios in your analysis. What are financial ratios? Which ratios might you use in your analysis? List them and explain what information they provide. How would you use them to make managerial decisions?
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This solution discusses the purpose of and tools used for financial statement analysis in 517 words.
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Financial Management Principles
You have been given the financial statements and asked to analyze the financial performance of your division. Other managers have suggested you use financial ratios in your analysis. What are financial ratios? Which ratios might you use in your analysis? List them and explain what information they provide. How would you use them to make managerial decisions?
The purpose of the financial statement financial analysis is to provide relevant information to all the stakeholders of the organization which will help in their decision making. A financial ratio shows the relationship between two or more financial figures. This also helps in comparing the performance of the organization and used in the control of the organization. Different users of financial ratios may (bankers, investors, and the company) interpret financial ratios in different manner. Bankers are interested ...
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